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After resisting the continent's Continuing malaise, the eastern and central blocs of Europe are now succumbing to the slowdown—and investors are heading for the exits. Their hasty selling of European bonds, though, has overshadowed opportunities in the stocks of some emerging European countries.

Poland, Hungary, and the Czech Republic, with their large manufacturing bases that export to countries in the euro zone, have been hit particularly hard by Europe's woes. But Russia and Turkey have much younger populations, higher consumer spending, and greater economic growth.

When the European Central Bank introduced backstop measures for the euro-zone countries in July, emerging Europe—bonds in particular—started looking attractive. The Europe sub-index of the JPMorgan Emerging Markets Bond index, which tracks emerging-Europe bonds, has gained 20.9% in the past year.

But that momentum may have run its course. Lots of poor data in recent days, including falling economic-growth rates in Poland and the Czech Republic, have forced central banks to lower borrowing rates, putting investors back on the defensive. "It's not the most exciting region anymore," says Pierre-Yves Bareau, portfolio manager of the JPMorgan Emerging Markets Debt Fund.

The reason to pull back now is "valuation based," declares Scott Moses, who manages the Transamerica Emerging Markets Debt Fund. European dollar-denominated debt outperformed relative to Latin American peers this year. His fund shifted in July to increase its emerging-Europe allocation to 30% of the portfolio, but now has scaled back to 25%. "Now, we are easing back [from the European assets market], which we believe has mostly run its course," Moses says.

Hungary and the Czech Republic are particularly troubled. Hungary is in a recession, and the government's unorthodox policies have alienated investors. For more than a year, they've been waiting for the country to patch up its relationship with the International Monetary Fund and set up a backstop funding line, which the country had promised to do but has failed to deliver. "The policies that come out of Hungary are fairly erratic," says Sam Finkelstein, portfolio manager of the Goldman Sachs Emerging Market Debt Fund. "We would like to see consistently market-friendly policies in Hungary, before we invest there."

THERE ARE SOME BRIGHT SPOTS. Russia is riding into what could be a critical year as it opens up its domestic bond markets to foreign investors. This, coupled with stable oil prices and progressive domestic policies, has drawn both bond and equity investors. Similarly, Turkey's economy may be slowing down, but it has well-performing domestic consumer companies and banks with strong balance sheets that are trading at cheap prices, says Derrick Irwin, portfolio manager of the Wells Fargo Advantage Emerging Markets Equity Fund. His recommendations include the Turkish bank Turkiye Is Bankasi (ticker: ISATR.Turkey) and conglomerates Koc Holdings (KCHOL.Turkey) and Sabanci Holdings (SAHOL.Turkey).

Bond investors won't find Poland and the Czech Republic very promising, but equity investors should take a closer look, especially once there are signs of stability in the economy. Czech shares are trading at just 10 times next year's earnings, well below the global aggregate of 12 times, said Audrey Kaplan, senior portfolio manager of the Federate Intercontinental Fund. Eurocash (EURO.Poland), a Polish wholesale distributor, and Bank Pekao (PEO.Poland), a Polish bank, are well-run companies Irwin is eyeing.